The shifting landscape of the U.S./Central American rice business

For the first time in history, in the next few days, Brazil will be shipping paddy rice to Costa Rica (25,000 tons) and Guatemala (6,000 tons).

This is big news, says Dwight Roberts, president of the U.S. Rice Producers Association[3] (USRPA). “There have been small amounts of milled rice shipped from there into Costa Rica and Mexico. Paddy rice has gone to Nicaragua but this latest news should be eye-opening.”

Roberts spoke with Farm Press on August 26 after just returning from a trip to Central America where he attended a board meeting of the Central America Rice Federation, known as FECARROZ. In May, the group – representing large U.S. rice importers – released a letter expressing displeasure with continuing quality issues with those imports (more here[4]and here[5]).

But Roberts is quick to point out the situation isn’t just about quality – it’s also about availability. At this time, the U.S. rice crop “is reduced. We don’t have the needed rice. We have one of the lowest rice acreages and our carryover stocks are the lowest for many years. And the old crop we have is being offered at substantially low prices.”

The Central Americans are, “glad to hear that our growing season and harvest has been good. The quality on all rice – hybrids and non-hybrids – is much improved this year. The weather conditions have been such that the problems with chalk and milling don’t appear to be as big. The early harvest results from south Louisiana and along the Texas Gulf show that all varieties are cutting good quality.

“The Central Americans know we have good rice and they want to buy it. They realize the biggest competition for rice in the United States is soybeans and corn. They prefer doing business with us because of our good rice and they also trust our logistical set-up – the routine of buying rice and getting it down there quickly.”

“Even as we speak, there are buyers coming up here and having discussions with our exporters. They want specific varieties, low-chalk varieties, in general, whether hybrid or non-hybrids. They’re learning more and more about the U.S. system, how we move rice and what varieties are available.

“They’re cautiously optimistic about this new harvest. It isn’t far enough along for them to get a good feel and buy in. It’ll be interesting to see what happens in the next six weeks as we get new crop into the system what their reaction will be.”

Roberts is careful not to come across as a hybrid basher. “I represent farmers that love hybrid rice and the very high yields.”

Even the Central Americans, he says, “understand that hybrid rice will be the rice of the future. I think everyone believes that. It just isn’t easy to produce the grain quality in hybrid rice as it is in other varieties. That’s the challenge.

“The Central Americans aren’t totally against hybrids. They want that door to stay open. However, they’d like to buy good-quality hybrid rice that is segregated, not mixed with other varieties. They see that as a big problem. Once our rice is loaded on an ocean vessel we comingle many varieties – different sizes, cook different, mill different. So, for them to mill hybrid rice, they need rice that isn’t comingled.”

An example of how this is shaking out, says Roberts, is that at the end of August a train will head to a Monterrey mill pulling some 150 cars loaded with a variety grown specifically for Mexico. “This is U.S. farmers selling directly to the Mexicans. We’re trying to get back to the old idea of selling the customer what they want.

“Of course, we’ve always been a paddy supplier. We’ve always shipped a lot of paddy rice to Mexico and the Central Americans. It’s nothing new that we’re sending raw materials to their mills.”

It’s important to understand that the Central American countries all have populations with different palates and levels of pickiness. “For instance, Mexico looks at rice a bit different than, say, Guatemala. Rice isn’t at the heart of the Mexican diet and they aren’t as demanding.

“Go down to Honduras and they eat more rice and they’re more knowledgeable about what they want.

“Get to Nicaragua, Costa Rica and Columbia and rice is a daily staple. Even the poor, when they go to the market and see a lot of chalk in the package they won’t buy it. That’s even though chalk doesn’t do anything and disappears when you cook it. But they’re very picky.”

It’s hard for U.S. citizens to relate, he says. “It’s a cultural difference. The average American doesn’t even know what chalk is. Raise the price of rice 10 cents a bag here and no one even notices. Down there, raise the price even a fraction, and there can be protests.”